The U.S. government makes approximately 80 million separate
payments per month. These include payments for Social
Security; Supplemental Security Income; Medicare; Medicaid;
national security needs, including military salaries, military
retirement, veterans’ benefits, and defense contractors; income
tax refunds; federal employee salaries and retirement; law
enforcement and operation of the justice system; unemployment
insurance; disaster relief; goods and services sold to the
government under contracts with small and large businesses; and
many others. If Congress does not act to extend borrowing
authority, all of these payments would be at risk. This
would impose severe economic hardship on millions of individuals
and businesses across the country.

It is important to point out that extending borrowing authority
does not increase government spending; it simply allows the
Treasury to pay for expenditures Congress has previously
approved. Failure to meet those obligations would cause
irreparable harm to the American economy and to the livelihoods
of all Americans. Even a temporary default with a brief
interruption in payments that Congress subsequently restores
would be terribly damaging, calling into question the willingness
of Congress to uphold America’s longstanding commitment to meet
the obligations of the nation in full and on time. It
should also be noted that default would increase our borrowing
costs and damage economic growth and therefore add to future
budget deficits, not decrease them. This is why no
President or Secretary of the Treasury of either party has ever
countenanced even the suggestion of default on any legal
obligation of the United States.

Notice the one thing Geithner doesn't say? He doesn't say that a
debt ceiling breach would result in not making interest payments.

The term "default" gets thrown around a lot, and a lot of people
seem to suggest that if the country doesn't make its legally
obligated to, say, Social Security, ten that would be a kind of
"default."

And although that would be an economic calamity, there is an
order of magnitude difference between not making a payment to an
entitlement recipient, and not making a coupon payment on a US
Treasury, an instrument that's at the heart of the global
financial system, and is the very definition of a safe asset.

Of course, to believe that the Treasury can make interest
payments, while not making other payments, is to believe that the
Treasury has the ability to "prioritize" payments, which is both
a legal and technical nightmare. The Treasury has been extremely
cagey about what it can do, but here
Brad Plumer at Washington Post makes a key observation:

In theory, Treasury might be able to prioritize bond payments
above all else, says Steve Bell of the Bipartisan Policy Center.
The computer system that
handles U.S. sovereign debt, Fedwire, is separate from the system
overseeing payments to government agencies and other
vendors. Yet it’s unclear whether Treasury has
the legal authority to prioritize in this way — the agency has
never dealt with this situation before. “Anyone who says they
know for sure whether this is legal is not telling the truth,”
says Bell.

So it's not preposterous that the Treasury might be able to
technically prioritize US sovereign debt. And both Geithner and
Obama omitted bond payments from those things that would not get
made in a true debt ceiling breach.

There's no doubt that breaching the debt ceiling would be a major
legal and economic calamity, but the ability to keep making bond
payments (if you think that's what these puzzle pieces indicate)
represent the difference between a calamity and an epic calamity.